Another day, another inversion in the Treasurys market, when a shorter-term government security commands a higher interest rate than a longer-term one. It's considered one potential warning sign of a recession.
There are multiple potential matchups of these government bonds. The pairings that tend to get the most attention are the 3-month-to-10-year, as just happened, and the 2-year-to-10-year, which inverted in July and has been upside down since.
"Historically, such an inversion has typically preceded economic downturns and therefore is taken as a warning sign," Ryan Severino, JLL chief economist, tells GlobeSt.com. "Some economists think the 3 month-10 year is the gold standard [as an inflation sign]. Other economists look at other inversions. Some look at multiple. But none will take this as a positive sign."
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